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How not to wallow in power shortages

How not to wallow in power shortages

In the Indian context, electricity is a concurrent list subject under the Constitution. The states and the Centre jointly endeavour to provide access to electricity, although the primary responsibility of ensuring availability and distribution of power is with the state governments. The Union government coordinates planning, and provides supplemental generation, interstate and inter-regional transmission and 90% support for rural electrification. It encourages reforms in electricity distribution and promotes energy conservation and efficiency, besides providing assistance from financing institutions.

Attaining and sustaining economic growth of around 9% is possible only through a paradigm shift in the magnitude of capacity addition targets, provision of access to electricity to all sections of society, systems of project arrangement, reliability of power management and supply, reduction in associated transmission and commercial losses of distribution entities and free movement of electricity regardless of ownership.

The Electricity Act, 2003, has provided an enabling mechanism for all this to happen. The present levels of reported peak shortage of at least 12%, nearly 13,000MW, and energy shortage of around 10% are wholly unacceptable. However, overcoming these shortages and growing electricity needs call for unshackling the generation, transmission and distribution of power. The sector is now well regulated, with electricity regulatory commissions at the Centre and in the states. Ownership could be public or private, and returns on investment attractive enough for investment in relation to competing opportunities.

The present installed capacity of generation is around 151,000MW, comprising around 37,000MW (24%) hydropower, 4,120MW (less than 3%) nuclear power and around 15,000MW (10%) renewable energy other than hydropower. The rest is thermal power from coal, gas and diesel. Besides, India also has around 25,000MW of captive power capacity.

The 11th Plan envisages capacity addition of at least 78,000MW. This target was almost four times the previous five-year capacity addition achievement. If our immediate neighbour in the east can add 100,000MW in one year, why shouldn’t we try and achieve it in five or six years?

If the economy has to attain a sharply rising trajectory of growth, the power sector cannot follow a flat trajectory. The first and foremost requirement is placing orders in time for plant equipment, which was ensured within the first two years of the 11th Plan. A steady and sustained process of fresh starts has to be ensured. If we can ensure around 20,000MW of fresh starts every year, we should be able to attain capacity addition of around 75,000MW in five years, accounting for unavoidable slippages.

This is certainly attainable. In calendar years 2007 and 2008, fresh starts of 57,500MW capacity were noted against 17,000MW of capacity in the previous two years—2005 and 2006. What is most significant is that within this figure, the private sector accounted for 26,879MW, the state sector 17,247MW, and the Central sector 13,458MW. At the end of 2008, it was estimated that 88,000MW of capacity was under construction, comprising 71,633MW in the thermal sector, 3,160MW in the nuclear sector and 13,085MW in the hydropower sector. This tabulation excluded a captive capacity of around 10,000MW under construction.

Further, the manufacturing capacity of Bharat Heavy Electricals Ltd (Bhel) must be enhanced and new companies introduced. The need for capacity addition is a challenge that has to be converted into a growth opportunity—making India a hub for manufacturing of super-critical thermal power equipment.

Load-shedding: A child studies by candlelight. Economic growth depends on a paradigm shift in the scale of capacity addition targets, provision of access to power to all sections of society and effective transmission. Parveen Kumar / Hindustan Times

The establishment of a Larsen and Toubro Ltd-Mitsubishi Heavy Industries Ltd facility as well as the recent entry of Alstom SA with Bharat Forge Ltd and Toshiba Corp. with the JSW group for the manufacture of state-of-the-art super-critical technology could provide tough competition to Chinese and other manufacturers. Other firms are also showing interest.

While this capacity comes up in India, the demand for equipment has to be met through imports with strict quality checks as an interim measure. The alternative is to continue to wallow in power shortages till domestic capacity comes up. This is not acceptable.

Bhel’s record of supplies has not exceeded 5,000-6,000MW in a single year. The reported delivery of Bhel in the last two years has only been 55-61% of the target capacity. The quality of Bhel equipment is good, but we need better quantity and in time. There is a place for at least four manufacturers in the Indian power sector.

Project monitoring needs a revolutionary change. Despite close monitoring at the highest levels, slippages have been large. It is necessary that the project developer, activities at the site, financial releases, engineering drawings and the equipment being manufactured by the vendors be brought online to facilitate pinpointing of accountability and reasons for any delay. With full support from Bhel, this mechanism has been adopted at NTPC Ltd’s Dadri expansion project. It needs to be extended to all 12th Plan projects.

Slippages in project commissioning on account of equipment supply, lack of fuel (gas and nuclear) and contractual issues continue to haunt us, besides project management. In 2007-08, nearly 3,000MW slipped on account of non-delivery of equipment and nearly 2,500MW on account of non-availability of fuel (gas and nuclear). In 2008-09, nearly 2,000MW slipped on account of non-delivery of equipment, 1,945MW on account of non-availability of fuel and 2,400MW on account of a change of definition of commissioning in midyear. These slippages should be made good easily in the current year.

In respect of transmission, Power Grid Corp. of India Ltd has impressive achievements and plans for extra-high voltage transmission. Some 37,000MW of inter-regional transfer is soon achievable. States are not investing adequately on transmission requirements. Unless transmission and sub-transmission are attended to, power will not reach the growing towns and the villages to be electrified under the Rajiv Gandhi Grameen Vidyutikaran Yojana, where the government of India is providing outright grant of 90% at a very liberal scale. This is a serious issue.

Our energy needs are as colossal as our consumption levels are abysmal. We need to increase availability and consumption with a strong emphasis on efficiency. Four Es are crucial to our development: energy, environment, equity and efficiency. This has to be the cornerstone of our power and energy development programme. The energy labelling programme, the Energy Conservation Building Codes and the Bachat Lamp Yojana (energy-saving lamp scheme) should see large-scale proliferation.

Anil Razdan is a former Union power secretary. Respond to this column at feedback@livemint.com

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